Government Turns Its Attention Towards Debt Collectors

The Consumer Financial Protection Bureau recently released statistics regarding the most common complaints it receives about debt-related troubles. The numbers showed that the largest category of such complaints involve mortgage issues, while complaints about credit card debt are not far behind.

The recent data showed that the most common complaints received by the CFPB are those concerning mortgages, especially calls after a borrower falls behind on payments and faces possible foreclosure. Billing disputes are the biggest reason for credit card complaints followed by interest rate disputes and identity theft. Finally, among banking customers, disputes over opening and closing accounts represent the largest category of CFPB complaints.

The CFPB says that given a rise in complaints from consumers it intends to increase its oversight over debt collectors and will seek ideas from the public and others regarding what to do to ensure that debt collection practices do not lead to the abuse of consumers. Reports of debt collectors calling customers with incorrect information about debts have especially troubled officials with the CFPB who say that debt verification and harassing phone calls are some of the most troubling problems encountered by the agency.

The Association of Credit and Collection Professionals has responded to the announcement by the CFPB by saying that it wants to ensure debt collectors are able to pursue those who owe debts to companies. Debt collection is a $12 billion industry and lobbyists have already been hired to fight on behalf of these debt collection companies to ensure that any new regulations issued by the CFPB do not harm the industry.

Experts have noted that the government needs to do more to modernize its efforts to control debt collectors, given that current laws are out of date and have not kept up with modern technology. These new technologies allow debt collection companies to use the Internet, text messages and even sophisticated auto-dialers to track down and harass consumers.

There have been some signs that the CFPB is willing to take action to fight on behalf of consumers and punish those companies that operate outside of the law. Just last week, the CFPB announced that it would fine Cash American International, a major payday lender, $45 million and order the company to return an additional $14 million to consumers over questionable lending practices. The CFPB said that Cash American International routinely overcharged some consumers and engaged in inappropriate lending behavior, two things that resulted in millions of dollars of penalties. The investigation represents the first ever enforcement action against a payday lender, hopefully a sign of things to come.

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